Southwest Announces Huge $18 Billion Plane Order for Boeing
Dave BondIt now seems that Southwest Airlines will become the first carrier to order Boeing’s 737 MAX. In fact, the company will be buying 150 of these more-efficient planes and about 58 737 jets. This order has a combined value of close to $18 billion.
The carrier ordered single-aisle 737s with a catalog value totaling more than $19 billion from Boeing. However, it is not known just how big of a discount the airline got since they ordered so many planes.
Overall, the 737 MAX accounts for 150 of the 208 jets that Southwest Airlines purchased. The airline said that it holds options for another 150 planes if they want them. Boeing’s list price for the MAX is $77.7 million for the smallest model and $101.7 million for the largest. However, as said earlier, airlines are able to typically negotiate these prices down when they buy in bulk.
Reports show that an upgraded engine on the MAX actually helps cut fuel usage by about 12 percent compared to the current 737 model. This is great news for airlines since fuel costs are typically the number one expense for any airline.
Richard Aboulafia, who is the vice president of consultant Teal Group, said that Southwest has done everything it can to lower their costs of operations. So now it comes down to getting better technology to save money on fuel. Overall, Boeing should be treating this as a very strong endorsement for the MAX. They wanted airlines to buy it because it offers better fuel efficiency, and that is just what Southwest Airlines is doing.
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